KeNo's Housing and Economic Portal: Monday August 3 Housing and Economic stories

Sunday, August 2, 2015

Monday August 3 Housing and Economic stories

Spanish ghost airport costing 1B euros attracts offer of just 10,000 euros - (www.cnbc.com) One of the most infamous chapters of Spain's economic crisis on Friday appeared to be drawing to a farcical conclusion, after a Chinese investor bid just 10,000 euros in an auction to buy the ghost airport of Ciudad Real. The Chinese group was the only bidder for the vast-but-vacant airport built in the thinly populated Castilla-La Mancha region of southern Spain for a reported 1 billion euros. Ciudad Real boasts a 4km runway — long enough to handle an Airbus A380m, the world's largest passenger jet — and a terminal building designed to accommodate 10 million customers a year.

Puerto Rico Default Recovery Rates as Low as 35%, Moody’s Says - (www.bloomberg.com) Investors may receive as little as 35 cents on the dollar under a restructuring of Puerto Rico debt if the commonwealth defaults, Moody’s Investors Service said. Debt sold by the island’s Government Development Bank, Highways and Transportation Authority, Infrastructure Finance Authority and Municipal Finance Authority is among the $26 billion with the lowest recovery rates, Moody’s estimated Wednesday in a report. The debt is ranked Ca, the second-lowest rating from the New York-based company. “We believe that the probability of default is approaching 100 percent, and that losses given default are substantial,” Moody’s analysts wrote. “Bondholder recoveries will be lowest on securities lacking explicit contractual or other legal protections.”

Stock Downturn Hits Chinese Investors in the Heart, Not Just the Wallet - (www.nytimes.com) Farmers turned village community centers into makeshift trading floors. Young workers quit low-paying jobs to play the market full time. Retirees started investment clubs, counseling one another on stock picks. China fell under the spell of the stock market over the last year, as millions of factory owners, university students, wheat growers and other investors jumped at a chance to strike it rich. “When we eat breakfast, we think of the stock market. When we sleep, we see flashing red and green screens,” said Elizabeth Xu, 37, a customer service supervisor at an electronics company in Shanghai, who invested $2,500 last fall. “This is our new sport.” But with the market stumbling in recent weeks, investors are now engaged in a national game where the risks are increasingly outweighing the rewards.

Brazil Bank Said to Lose $2 Billion on Junk-Rated Loans - (www.bloomberg.com) Brazil's national development bank lost out on an estimated $2 billion by setting interest rates too low on loans to junk-rated countries and builders facing corruption allegations, said the federal prosecutor leading an investigation into the lender. The prosecutor, who is assigned to Brazil’s budget watchdog, said the losses are tied to $12 billion of loans from a workers fund that the state bank known as BNDES shouldn’t have made because the rates trailed inflation. More than two-thirds of that cash funded projects from Angola to Venezuela by builder Odebrecht SA, whose chief executive officer was indicted this week as part of a separate corruption probe at state-run Petroleo Brasileiro SA. “We’re questioning the real social benefits of these loans,” federal prosecutor Marinus Marsico, who led the nine-month preliminary inquiry into the bank, said in an interview. “If BNDES’s goal is to promote national development, why is the bank allocating scarce funds to a couple of private companies overseas?”

Puerto Rico Left Adrift by Washington as Bankruptcy Bills Stall - (www.bloomberg.com) As California risked being locked out of the credit markets during the recession, officials sought federal loan guarantees to avert deep spending cuts that threatened to cascade through the biggest U.S. state. Washington turned them away. Six years later, as a Puerto Rico agency veers toward a default as soon as Aug. 1, federal officials in the nation’s capital have echoed a refrain heard during recent state and local fiscal crises: Fix the problem on your own. President Barack Obama’s administration and the Federal Reserve have said it’s up toCongress to decide how to assist the island as it struggles with $72 billion of debt. Yet on Capitol Hill, Puerto Rico’s push to allow some agencies to file for bankruptcy has stalled. Efforts to find a Republican to co-sponsor the legislation haven’t borne fruit. “Federal authorities seem to be taking the position that the only possible options are the extremes of a bailout or nothing at all,” said Arturo Estrella, a former Federal Reserve Bank of New York economist.

OTHER STORIES:

Pension Funds Hunting Yield Return to Bonds Tied to Risky Loans - (www.bloomberg.com)